October 19, 2006

FLAT EARTH SOCIETY:

When George Osborne put Lord Forsyth of Drumlean in charge of the Conservatives' tax commission last October, he asked him to come back with a simpler, flatter tax system.

Eleven months later, the formidable Scottish peer has returned with a potentially explosive package of proposals that would slash taxes by Â£21 billion. [...]

Its response is based on four principles that are the foundation of an efficient tax system: tax should be as low as possible; the least well-off should pay a smaller proportion; tax should be easy to understand, calculate and collect; and changes to the system should be kept to a minimum.

It argues that the "flat tax" system mooted by Mr Osborne last year is "theoretically attractive" but would not be viable in Britain. Despite this, it argues that is essential to move towards a flatter tax system.

Instead, the report sets out detailed ideas that will reduce and simplify personal and business taxation. Forty proposals are spelt out, including plans to scrap inheritance tax, cut the basic rate of income tax to 20 per cent and introduce transferable personal allowances.

Most of the proposals could be introduced during the Tories first term in office.